Correlation Between First Bancorp and MNB Holdings
Can any of the company-specific risk be diversified away by investing in both First Bancorp and MNB Holdings at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining First Bancorp and MNB Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Bancorp and MNB Holdings Corp, you can compare the effects of market volatilities on First Bancorp and MNB Holdings and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in First Bancorp with a short position of MNB Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Bancorp and MNB Holdings.
Diversification Opportunities for First Bancorp and MNB Holdings
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and MNB is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding First Bancorp and MNB Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MNB Holdings Corp and First Bancorp is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on First Bancorp are associated (or correlated) with MNB Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MNB Holdings Corp has no effect on the direction of First Bancorp i.e., First Bancorp and MNB Holdings go up and down completely randomly.
Pair Corralation between First Bancorp and MNB Holdings
Given the investment horizon of 90 days First Bancorp is expected to generate 1.03 times more return on investment than MNB Holdings. However, First Bancorp is 1.03 times more volatile than MNB Holdings Corp. It trades about 0.04 of its potential returns per unit of risk. MNB Holdings Corp is currently generating about 0.0 per unit of risk. If you would invest 2,373 in First Bancorp on September 14, 2024 and sell it today you would earn a total of 443.00 from holding First Bancorp or generate 18.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.63% |
| Values | Daily Returns |
First Bancorp vs. MNB Holdings Corp
Performance |
| Timeline |
| First Bancorp |
| MNB Holdings Corp |
First Bancorp and MNB Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Bancorp and MNB Holdings
The main advantage of trading using opposite First Bancorp and MNB Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Bancorp position performs unexpectedly, MNB Holdings can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in MNB Holdings will offset losses from the drop in MNB Holdings' long position.| First Bancorp vs. LINKBANCORP | First Bancorp vs. Bankwell Financial Group | First Bancorp vs. FS Bancorp | First Bancorp vs. Finward Bancorp |
| MNB Holdings vs. Harbor Bankshares | MNB Holdings vs. Oconee Financial | MNB Holdings vs. Mission Valley Bancorp | MNB Holdings vs. MF Bancorp |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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